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WTI Crude Oil: A Long-Term Elliott Wave Update

Title Image - WTI Crude Oil Elliott Wave Forecast and Analysis - 251205

Hello everyone, and welcome back to our long-term perspective on WTI Crude Oil.

We’ve previously shared our big-picture view Elliott Wave Analysis & Forecast, OILUSD Targetting 10$, including the significant low that concluded a major corrective phase in April 2020. Today, we're building on that foundation, offering an alternative and clearer look at the unfolding moves on the weekly chart. While market analysis, especially in financial instruments like oil, is a craft that requires careful consideration of many factors, the Elliott Wave Principle offers a valuable framework for anticipating potential price paths.

This analysis is for educational purposes only and is based purely on technical pattern recognition. It is not investment advice. Always conduct your own research and understand the risks involved in trading Your Money or Your Life (YMYL) assets.

The Big Picture: A New Era Post-2020

The fundamental takeaway from our long-term view remains consistent: the dramatic collapse of WTI Crude Oil prices in April 2020 was not merely a reaction to global events, but also the conclusion of a massive, multi-year corrective move, which we label as Red Wave /2. This low, which briefly took oil below the $10 mark as we had anticipated, was the necessary launchpad for the next massive uptrend, the Red Wave /3.

This new uptrend, Red Wave /3, began right after that 2020 low. However, no market moves straight up without pauses. We believe the first major leg of that rally—let’s call it Blue Wave (1)—is now complete. The market is currently tangled in a significant pullback, or correction, which we label Blue Wave (2). Our ultimate long-term target for the conclusion of this Blue Wave (2) correction is deep, likely settling around the $42 area or even low.

Unpacking the Complex Correction: Blue Wave (2)

Corrections are inherently challenging to forecast. They are the market’s way of confusing the most people possible, and they rarely follow a clean, simple path. While a simple correction is expected for a Wave 2, we are currently observing a much more complicated and extended pattern—a complex correction. If we take alternatve correctiory view, blue wave 4 will be expected as simple.

We are tracking this pattern as a series of connected moves, often labeled as a W-X-Y-X-Z structure. It’s like watching the price repeatedly try to correct, fail, rebound, and then try to correct again, all before it is truly ready for the next impulse phase.

Here is a summary of the key price action that defines this complex pattern:

  • The Initial Whipsaw: The market saw several significant movements, including a notable low near $64.36 in March 2023. This was part of the initial back-and-forth price discovery within this correction.
  • The Big Rebound (Wave X): Following that March 2023 low, the price mounted a strong rally, topping out near $93.95 in September 2023. This move acted as a crucial connector, bridging the earlier parts of the correction to the later ones.
  • The Wave Y Drop: From the $93.95 peak, the market began its next major leg down, which we label Red Wave (y). This move was relentless, unfolding in a three-wave structure that finally concluded near $54.76. The final segment of this decline was particularly telling, appearing as a diagonal pattern, which often signifies the exhaustion of a trend.

The Next Connector (Red Wave X)

With the significant low for Red Wave (y) established at $54.76, the market has now started its final major connector move before the ultimate decline. This current advance is what we call the Red Wave (x).

The purpose of this Red Wave (x) is to provide one last significant upward relief rally.

Our analysis suggests that this current rebound (Red Wave x) is unfolding toward a prime target area near $84. This is an important level based on historical Fibonacci relationships and wave equality within the larger pattern.

Near-Term Focus: The Push to $80

If our count is correct and the Red Wave (y) low at $54.76 remains untouched, we expect to see an immediate, impulsive strike higher. The most immediate target for this current bullish momentum lies around the $80 area. This move would represent the final major upward segment of this Red Wave (x) connector.

  • Key Support to Watch: The low of $54.76 is the most critical line in the sand for this near-term bullish outlook. As long as the price stays above that level, the path of least resistance is up toward the $80-$84 range.

The Final Act: Red Wave (Z) and the $42 Bottom

Once the market completes this current Red Wave (x) rally near $84, we anticipate the final leg of the complex correction: the Red Wave (z).

This final Red Wave (z) will be the one to complete the Blue Wave (2) correction, bringing the price down toward the long-term target of the $42 area. Hitting this area will mark a generational low for WTI Crude Oil, finally clearing the path for the massive, sustained rally we expect in the subsequent Blue Wave (3).

The Alternative Scenario: What if the Low is Already In?

We must always consider alternative possibilities, especially in complex corrective structures where things change frequently.

If the WTI Crude Oil price were to break significantly below the critical $54.76 low (the low of Red Wave y), it would force us to rethink the structure. In this alternative scenario:

  • It would suggest that the Red Wave (y) was not truly finished.
  • It would mean that the entire complex correction (Blue Wave 2) is actually terminating earlier and in a simpler pattern than expected.
  • If this lower low occurs, the correction would be complete, and we would immediately pivot to anticipating the massive, sharp rally of the Blue Wave (3), bypassing the expected Red Wave (x) and Red Wave (z) moves altogether.

While this is an important possibility to monitor for risk management, our primary analysis suggests a final rally toward $84 is necessary before the ultimate bottom can be established.

Forecasting complex corrections is a matter of time and patience. Our Elliott Wave analysis strongly suggests that WTI Crude Oil is positioning itself for a final rally toward the $80-$84 range, as long as the $54.76 low holds. Only after this rally is complete will we look for the last, decisive move down toward $42 before the long-term, multi-year bull market (Blue Wave 3) begins.

We will continue to monitor the market and provide updates as the pattern develops. Remember, successful trading is about managing probability, not predicting certainty. Stay disciplined, and always manage your risk.

Wisdom from Past

"Oil is not traded on supply alone, but on the market's fear of tomorrow's shortage. Master the fear, not the flow."

Crucial Risk Management Advice

Crucial Advice: Effective trading is based on disciplined risk management, not prediction certainty. Always use a firm stop-loss to protect your capital. Macroeconomic news, particularly from the Federal Reserve or the European Central Bank, can override any technical pattern instantly.

Profile Image of Ghulam Muhiuddin, Certified Technical Market Analyst, 18 Years of consistent market analysis and forecasting</strong>

About the Author

Experience: This analysis reflects the insights gained from 18 Years of consistent market analysis and forecasting, specializing in the application of the Elliott Wave Principle and advanced technical structures.